Chapter 7 Bankruptcy
Financial hardship is a common experience, especially over the last several years in Arizona. When a person is “insolvent”, meaning you cannot pay your obligations to your creditors, a possible solution is to file for bankruptcy. Of course, there are other solutions available that may make more sense for you. An experienced bankruptcy attorney can help you identify which solution is best for you. Things that are taken into consideration when determining if you should file for bankruptcy are:
Earnings compared to monthly obligations
Total amount of debt
Nature of your debt
Ability to pay if payments were to be stretched out over a longer period of time
The most common bankruptcy filed in America is a Chapter 7. Chapter 7 is considered a “consumer” bankruptcy and is a total forgiveness of virtually all kinds of debt including medical bills, credit cards, loans for houses and cars, utility bills and in some cases student loans and taxes from any
To qualify for Chapter 7 the only issue that needs to be addressed is the income of the debtor, meaning the person filing for bankruptcy. If you are under the income thresholds for your family size for the county in which you live, then you can file for bankruptcy under Chapter 7. Clients who do not qualify for a Chapter 7 might consider a Chapter 13 Bankruptcy; please call our office to set up a consultation to determine your eligibility.
When you are successful in filing your case under Chapter 7 all of your dischargeable debt will be wiped away, providing you with a clean slate. The only time in which your debts may not be discharged is if the debt was obtained by fraud, the debtor commits fraud during their bankruptcy case, or the debt is of a kind that cannot be discharged. Non-dischargeable debts are most commonly student loans from an accredited school AND the debtor cannot prove hardship, IRS tax debt incurred in the last three years, or debts that were obtained by fraud or misrepresentation.
Chapter 7 bankruptcy cases are generally quick, lasting less than six months. Most of the work is done before the case is filed and is focused on preparing the petition to file for bankruptcy. The most common issues relate to rule application. There are rules governing what types of property can be protected and what actions are permitted while you are preparing for bankruptcy. An experienced attorney can help you navigate these rules, avoid fraud charges, and ensure that the trustee has a file they can process smoothly and quickly.
Unlike many other areas of law that include elements of fairness and leniency towards parties, bankruptcy can be quite rigid and unforgiving. The rules are specific and following them to the letter is the only way to ensure that your case is completed successfully and you receive a discharge of your debt. Having filed over 400 bankruptcy cases, I can tell you that bankruptcy is easy when done right but is a nightmare when done wrong.